CNN INSIDE POLITICS

Congress Returns to Capitol Hill; Phil Gramm Announces Retirement

Aired September 4, 2001 - 17:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. JUDY WOODRUFF, CNN ANCHOR: This is INSIDE POLITICS. I'm Judy Woodruff in Washington. As the curtain goes up on the fall legislative session, a leading Republican is bowing out.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: I'm Jonathan Karl on Capitol Hill where a tearful Phil Gramm announced his political plans.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: I'm John King at the White House where the president holds a cordial meeting with the Senate majority leader despite the many confrontations just ahead.

MARK POTTER, CNN CORRESPONDENT: I'm Mark Potter in Florida where Janet Reno says she is in the running against Governor Jeb Bush.

ANNOUNCER: Now, Judy Woodruff takes you INSIDE POLITICS.

WOODRUFF: Thank you for joining us. Here on Capitol Hill, lawmakers are getting back to business after the August break confronting new budget constraints and one another. We'll discuss the budget battles taking shape today with Senate Majority Leader Tom Daschle and Minority Leader Trent Lott.

But first, an emotional and politically significant moment for the closely divided Senate. Another conservative Republican has decided not to seek re-election next year. CNN's Jonathan Karl joins us now with more on the announcement by Phil Gramm of Texas -- Jonathan.

KARL: And, Judy, Phil Gramm, of course, has built a career as a fierce critic of the federal government, but he left today saying he does not leave more cynical. In fact, he said he has more faith in our government than he had when he was first elected 25 years ago.

(BEGIN VIDEOTAPE)

KARL (voice-over): Plain spoken, powerful and feared by his enemies, Phil Gramm broke down when he recalled the toll his work over nearly a quarter century in Congress has taken on his family.

SEN. PHIL GRAMM (R), TEXAS: And I want to thank my wife, Wendy, and I want to thank my sons, Marshall and Jeff, for their steadfast support. And I want to thank them for not complaining about all the important events of their life that I missed.

KARL: The 59-year-old Gramm said the reason for his retirement is simple.

GRAMM: Remarkably, the things I came to Washington to do are done.

KARL: Those things he said included cutting taxes, reforming welfare and defeating the Soviet Union. As for what's next, Gramm says he'll finish out his term, and after that, it's anybody's guess.

GRAMM: If Coca-Cola called me up today and offered me $50 million to put the fizz back in Coke's stock, I might be tempted. But I got no reason to think that they're going to do that.

KARL: Gramm likes to portray himself as the champion of people like Dicky Flatt, a Texas print shop owner he used as a symbol of the hard working people who pay too much in taxes.

First elected to the House in 1978 as a Democrat, Gramm upset Democrats by co-sponsoring Ronald Reagan's first budget. Not long after that, he dramatically switched parties, and in 1984, was elected to the Senate as a Republican. In 1995, Gramm decided to run for president and got off to a quick start, amassing a huge campaign war chest.

GRAMM: Benjamin Franklin once said in a sexist way that no one would say in 1995 a man can have but three reliable friends in the world: an old wife, an old dog and ready money.

KARL: But money proved to be not enough. His campaign quickly fizzled and Gramm went back to work in the Senate.

(END VIDEOTAPE)

KARL: Phil Gramm says he is leaving confident that Texas will elect a Republican to replace him, but already top Democrats down in Texas are positioning for what they say will be now a real fierce contest for that Senate seat -- Judy.

WOODRUFF: Jonathan, there are already a number of senior Republicans in the Senate who have announced they're not going to run again. Are there more on the horizon? And what's the effect of all this?

KARL: Well, you have a number of Republicans who have already announced -- obviously in addition to Phil Gramm, you had Jesse Helms' announcement that he's not running for re-election. Strom Thurmond's not running for re-election. You also have -- we're awaiting an announcement from Fred Thompson sometime this fall as to whether or not he will run. Also, you have two sitting members of the Republicans in the Senate who are actively considering a run for governor, including Craig Thomas of Wyoming and Frank Murkowski of Alaska.

Now as far as what kind of an impact this will have, well, it certainly creates more potentially open Senate seats. But, Judy, all those states, all those states, solidly Republican states that Republicans say they are confident they can maintain Republican seats.

WOODRUFF: All right, Jonathan Karl, who's also here at the Capitol.

And now, let's go to the White House, where President Bush has just wrapped up a meeting with Senate majority leader Tom Daschle, a meeting that could set the framework and the tone for the budget wrangling ahead.

Let's check in with our senior White House correspondent, John King -- John.

KING: Well, Judy, I won't steal all your thunder, because you'll ask Senator Daschle the questions in just a few minutes, but he says this was a very cordial meeting with the president. Everyone now positioning themselves for the fall budget battle, the economy, the slowing economy and the shrinking surplus, obviously the dominant themes in that debate.

President Bush had Senator Daschle in this afternoon for discussion of the fall agenda. Again, the budget battle priority one. The Senate minority leader, Republican Trent Lott, was in earlier today. And as both senators emerged, it is clear the president's issues in this budget battle won't just be with the Democrats. One of the things many Republicans want now is another tax cut, a temporary cut in the capital gains tax they say. They say that would give the economy yet another boost on top of the Bush tax cut. The president was asked about that today. It is clear he's trying to keep an open mind, be polite to his fellow Republicans. But listen closely, he's also quite skeptical.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I agree with the assessment that a capital gains tax relief would pile up some revenues early in the process. As I mentioned, only half of our rebate checks have gone out, and the stimulus package that we all worked on prior to the recess is not fully in place yet.

(END VIDEO CLIP)

KING: Other White House aides making clear the president would prefer not to deal with the Senate Republicans pushing for a capital gains tax cut just now. And as we speak, as these meetings wrap up at the White House here today, more meetings on Capitol Hill, Vice President Dick Cheney out meeting with the chairman of the Senate Appropriations Committee, Senator Robert Byrd of West Virginia.

We're told Senator Byrd will make clear that in his view, there is not enough money left in Washington to give the president the more than $18 billion in additional defense spending that he wants this fall. So on the first day back at work, the budget battle taking shape, the president meeting with the two leaders of the Senate. The House leadership will be down tomorrow. The vice president already making the rounds on Capitol Hill. This is the first budget battle for this president with the Congress. Everybody drawing lines today on their first day back -- Judy.

WOODRUFF: John, as you mentioned, I will be talking with Senator Daschle in just a moment, but from the White House perspective, what did the president want to accomplish in that meeting?

KING: Well, certainly, what the president wanted to accomplish -- and you can ask the senator if he succeeded -- was to get off to a good start. Over the summer, there was a great deal of partisan debate about the shrinking surplus, about whether the Bush tax cut was to blame or the slowing economy or what was the right ratio to assign the blame. The president very much looking for success here. This is a first-year president who knows very well this, the final legislative session of this year, will go a long way in defining his first year in office. So he wants to reach bipartisan agreement on a patients' bill of rights, a big divide with the Democrats there. He wants to get his education bill through the conference committee down here as soon as possible so the American people see him signing major legislation into law. So he wanted to get off on a good footing with Senator Daschle to start the fall, but there are many confrontations ahead in all these issues, whether it's education, defense, patients' bill of rights will be debated. And what all parties agree is an increasingly tight spending environment because of the shrinking surplus.

WOODRUFF: All right, John King, at the White House.

Well, even while he was enjoying his summer recess back home in the state of South Dakota, Tom Daschle was laying the groundwork publicly and privately for that expected budget showdown here in Washington. Now that he is back in the Capitol city, his efforts, obviously, are intensifying, including that important meeting with the president just a short while ago. And now, his appearance here on INSIDE POLITICS.

Senator Daschle, thank you for being with us.

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: My pleasure, Judy.

WOODRUFF: We just heard John King say one of the president's goals was just to get off on the right foot here at this new session of Congress. Did the president accomplish at least that?

DASCHLE: I think he did. Obviously, the president is a very likable individual to begin with, and virtually every time we get together, we have a good and very cordial meeting. This one set the right tone. I think we do have to find a way to work together, and I think that's the message from the White House. And hopefully, that is the response he heard from me today. We will work together. We need to find a way to resolve the dilemma we're facing and we're ready to do it.

WOODRUFF: Senator, you had said going into this meeting that you were looking for specifics from the president on how he was going to pay for his priorities in education, the military reform, and at the same time, not dip into the Social Security trust fund. Did you get any of those answers today?

DASCHLE: Well, Judy, we didn't. I guess what I meant to say if I didn't was that over a period of time, we're hoping to get specifics. Today, I knew that the meeting was going to be too short, and really more introductory than anything as we get into the debate and the discussion about how we resolve these matters. I wasn't looking for specifics today. The president did say that he was absolutely certain that we could avoid dipping into the Social Security surplus and trust fund. And so with that assurance and providing us the kind of leadership that I hope he can, I hope we can make that commitment on a bipartisan basis, that we will not use Social Security trust funds for any other purpose.

WOODRUFF: But with a $1 billion surplus, senator -- at least that's what the CBO, the Congressional Budget Office, has said -- are you confident that the president can do that?

DASCHLE: I'm not, no. In fact I think I'm very skeptical right now. But I'm willing to listen. I think the ball is in the president's court. It was his budget, his tax bill. So now we've got to find a way with which to get through this challenge as well. I believe that it is possible but I'm skeptical.

WOODRUFF: Senator, also, the president today stressed again that he thinks if this is going to get done, it's going to get done in the Congress. He said we've got to get the priorities in the Congress; that's where spending has to be held down. Is that the right emphasis here, that the emphasis should be on you and your colleagues in the Congress?

DASCHLE: Well, Judy, I just say for the record that Congress, the Senate has not passed one dollar more than what the president has requested to date. We've passed two bills that have been signed into law. Both of those are within the president's budgetary request. We have passed appropriations bills that all fit within the confines of the budget resolution that the president proposed. So without a doubt, we are staying within the means and within the budget guidelines given us even though most of us opposed the budget that was passed last spring.

WOODRUFF: Can you assure the president and the people around him, senator, that you and others in Congress will not try to roll back or in any way undo the tax cut that was passed earlier this year?

DASCHLE: I don't think there's any appetite for doing that right now. Obviously, the votes wouldn't be there; the president would veto it even if you did. So I think that would be a lot of wasted effort. We've got to find ways outside of that option at least for now, and I'm prepared to do that. But, again, we need to go to him. He was the leader who has advocated the tax cut and the budget that we're now living under. Now I think it's the president's leadership that we're going to need as we work our way through this as well.

WOODRUFF: And what about more tax cuts in the nature, for example, of capital gains tax rate reduction that Senator Lott and other Republicans are pushing? DASCHLE: Well, I guess we'd have to take a look and see what budgetary impact it would have not only just over a couple of years but over the longer term. We don't want to compound our problem if we're in a very serious fiscal situation now, I can't imagine that we'd want to exacerbate that situation even more with additional cuts. So clearly, if they could be paid for or offset somehow, we'd be willing to look at them. But I don't think we ought to look at another thing that would cause a further problem with regard to the deficit that we're already looking at.

WOODRUFF: We've been talking primarily about the president's priorities, including education and military reform. I know education is also a priority of Democrats. But, senator, what about specific Democratic Party priorities like prescription drug benefits for senior citizens? Are you concerned with the budget picture being what it is that priorities like that will not be funded?

DASCHLE: Well, we said that last spring, Judy. We said that we were very concerned about the implications for prescription drug benefits and for education and for the investments in health, expanding health insurance to those who really need it, agriculture. There's an array of issues out there that could be very seriously encumbered as a result of the circumstances we face right now.

WOODRUFF: Senator, let me just ask you, you know, today, the president is making nice noises, if you will. You've been making polite noises for the most part. Why wouldn't that sort of a tone and attitude on the two sides last here? I mean the president today said, again, we need a new attitude in Washington. And he's looking to the Congress primarily for that.

DASCHLE: Well, I think we're willing to try to strike that new tone and a new attitude so long as there is a bonafide willingness on both sides to come to the middle. Our view is that we've come to the middle a lot, and we aren't going to be in a position to be dictated to. We've got to argue for the things we really believe in. That's why we're here. But we can do it in a civil tone, and I've tried my best to do that. We'll continue to do it this fall as we face these difficult challenges once more.

WOODRUFF: All right, Senator Tom Daschle, who is the Senate majority leader, thank you very much for talking to us.

DASCHLE: My pleasure, Judy.

WOODRUFF: Appreciate it. And as we said, Senator Daschle just finishing a meeting at the White House with the president.

Well, the counterpart in the Senate to Senator Daschle, of course, is Senate minority leader Trent Lott. I spoke with him about an hour ago about his meeting with the president today and their areas of disagreement with the Democrats. I started by asking Senator Lott if he and the president are discouraged as they look at the ramifications of a slumping economy.

(BEGIN VIDEOTAPE) SEN. TRENT LOTT (R-MS), MINORITY LEADER: No, he wasn't discouraged at all and neither am I. We've got work to do, and it's going to require some restraint and some setting of priorities in terms of spending. We also have a lot of important things yet to do. We've got the education bill that he has identified and is number one priority and is something that's important all over this country to try to do all that we can to make sure no child is left behind. We need to get that out of conference.

We've got the patients' bill of rights that's ready for conference and we have some other important issues we need to address like energy policy. That would affect the economy by the way, and we think would positively affect economic growth. And the president is also going to urge that the Senate take up trade promotion authority. So we've got an important agenda. Obviously, there is some sluggishness in the economy, and we want to watch that. We want to do whatever we can to be helpful. We think that the tax rebates that are going out now -- about half of them have gone out -- we think that will have a positive effect. We need to look for other ways to encourage economic growth.

WOODRUFF: Do you agree with Senator Pete Domenici that as of right now, it doesn't look like the American economy is going to come back very fast?

LOTT: You know, I'm not an expert in economic projections, Judy. And I think, you know, when you start doing that, you know, you're just taking a chance. I think the economy is fundamentally strong. You know, unemployment is low. You know, the stock market is something that's hard to figure. Today, it's up; it's been down. But you know, we need to give incentives. We need to make sure that people have more of their hard-earned money to support their families. I do think we need to make sure that we don't wind up spending too much money. That's one reason why the surplus has declined as fast as it has. We have had a significant amount of spending over the past two years, and it doesn't leave us a lot of room to keep raising it year after year.

WOODRUFF: Well, senator, on that point, the president said today that with a $1 billion surplus for 2002, he believes he can fund all of his priorities and not touch Social Security. Do you believe that's possible?

LOTT: Well, as a matter of fact, I think what he said is that the revenue coming into the federal government this year is projected to be something like $2.135 trillion. There's about a billion dollars of difference between what the Congressional Budget Office and the Administration Office Of Management And Budget are projecting. There's no question that in that size of a budget, we ought to be able to find a way to, you know, control our spending appetite and have some priorities to make sure that we fund education and that we get a prescription drug bill in place so that that will be there in the future, and, also, do what we need to do as we begin to improve our defense capability.

WOODRUFF: How essential is it that there be a capital gains rate tax cut?

LOTT: Well, I've been an advocate of that for years. If you go back and look at the history in 1997 in the early '80s and even back in the Kennedy administration, every time the Congress has cut capital gains rates, it has led to a spurt in the economy, because there's a certain amount of pin up, you know, or restraint from actually selling things you have, buying and selling, which creates growth in the economy. I think it would be a good thing to do. And now that we do have some sluggishness in the economy, I'd like to see us cut capital gains tax rates to 15 percent for the next two years. That would actually project and produce revenue increase of about $5 billion over the next two years. And then Congress would have to decide what to do beyond that.

WOODRUFF: Well, the president said today he has an open mind on the subject. Were you looking for more of an endorsement on that?

LOTT: No. I was just telling the president I thought this was something that we might consider. Obviously, the House would have to act. We would have to get bipartisan support in the Senate. He says that, you know, he had his tax plan. He made his recommendations to cut individual rates and to make the tax code fairer. And I think we ought to see the impact that the rebates will have when they are fully refunded to the individuals. But I think that capital gains rate cuts is something that would be helpful, we should consider. And I think he basically was saying, you know, "I made my request for the year." And I think with him, it's more of a question of timing than the justification of the substance of capital gains rate cuts.

WOODRUFF: Where do you think education will is going to come out, senator, when it comes out of conference committee?

LOTT: Well, I think that it will be a good bill. It won't be everything anybody would like to have. I do think that it will have flexibility, it will have requirement for some testing so we can see how our children are doing. It will have some funds for teacher training. It will have increased funding for a number of federal education programs that I think are important and helpful. The president asked for, I believe, an 11 percent increase in his budget...

WOODRUFF: Right.

LOTT: ... in education. There are those who would like to see a lot more. But that's the kind of thing that you have to ask yourself: Yes, let's increase it; let's do a better job of allowing decisions at a local level, but we may be not able to do it all in one bill.

WOODRUFF: Senator, just quickly, do you think the president is going to get all of his priorities funded this year?

LOTT: I think he'll get all of them funded to the most part. The defense area is going to be the one that will be certainly the most difficult because we do need a pretty good increase in spending there. WOODRUFF: Senator, finally, I wanted to ask you about Senator Phil Gramm, who announced his retirement today. I wanted to ask you about what that means for the Senate and what it means to you as a friend of his?

LOTT: Well, I'm disappointed. He is a good friend and I've worked with him now for over 20 years going back to our days in the House, actually, when he was still a Democrat and I was the Republican whip in the House. Phil Gramm is -- nobody is indispensable, but Phil will be really missed because he's a clear, you know, smart senator. He's a utility player. He's involved in just about everything that comes along. He's been critical in the budget area. He's involved in the banking and finance area. He's passed landmark legislation. He's just a great guy. But a lot of what Phil came here to do as an economist, by the way, because he was a professor, we do now have a balanced budget. We have been dealing with the blessings of a surplus. We have cut taxes. So -- and he has had the financial services modernization act that passed. A lot of what Phil Gramm came here to do over 20 years ago we've done.

And I understand why he'd want to move on and do something else in his life. But he will really be severely missed. I love the guy. He's just a tremendous person.

WOODRUFF: All right. Well, Senate Republican leader Trent Lott, thank you very much. Good to see you.

(END VIDEOTAPE)

WOODRUFF: Much more ahead. Stay with us. This is INSIDE POLITICS.

(BEGIN VIDEO CLIP)

JANET RENO, FORMER U.S. ATTORNEY GENERAL: I wouldn't be in this election if I didn't think I could win.

(END VIDEO CLIP)

ANNOUNCER: More, ahead from Janet Reno about her announcement that she is running for Florida governor. Can she beat Jeb Bush? David Broder and Charlie Cook will weigh in on that.

On the eve of their meeting at the White House, we'll look at the big issues facing Presidents Bush and Fox and their importance for the U.S. and Mexico. And later, how one congressman's return to Capitol Hill may not be a picnic because of his willingness to disagree with his party. Live from Washington, there's more of INSIDE POLITICS with Judy Woodruff straight ahead.

(COMMERCIAL BREAK)

WOODRUFF: Former attorney general Janet Reno made it official today: She will run for governor of Florida, setting up a possible political heavyweight battle with the president's brother. CNN's Mark Potter joins me now from Miami with the latest on Reno's plans -- Mark.

POTTER: Well, Judy, rather than holding a news conference, Janet Reno had reporters walk down this road to her house nestled in the woods. They walked down there one by one on a schedule and then were each granted a five-minute interview. The news, of course, was her answer to the question: Have you finally decided to run?

(BEGIN VIDEOTAPE)

POTTER (voice-over): For months, Janet Reno traveled the state, talked with voters, and hinted she might run for governor. Now, she is officially seeking the Democratic nod to run against Republican Jeb Bush.

RENO: I am running for governor. Today, we opened a campaign account, filed our papers with the secretary of state, and will now move forward to raise money and to build a campaign organization.

POTTER: She would not say anything negative about Governor Bush but listed her three major concerns.

RENO: I want to build the best educational system in the country for Florida. I want to do everything I can to preserve the environment as I have known it in my growing up. I was born and raised here and I love this state. I want to stand up for our elders.

POTTER: Polls show Reno is popular among Democrats but faces a difficult battle against incumbent and still popular Jeb Bush. Her biggest strengths, they say, are her populist appeal, widespread support from African-Americans, and national name recognition. But her biggest problem may be fallout from her controversial decisions as attorney general, including Waco, Elian Gonzalez and campaign financing.

TOM FIEDLER, "MIAMI HERALD": If she's going win, she has to make Governor Bush the issue in this campaign. She can't be the issue. She loses if she's the issue.

POTTER: Reno describes her time in Washington as a positive, not negative campaign issue.

RENO: I think people will understand that what they want is a governor who's not afraid to make the hard decision, and then to be accountable for it and to stand by it.

POTTER: As for concerns about her suffering from Parkinson's disease, Reno said she will present her doctors and medical records later in the campaign.

RENO: The first thing I did when I considered this was to determine whether it would affect my health or my ability to be governor. My doctors told me, no.

POTTER: At a news conference, Governor Bush responded to Reno's announcement. GOV. JEB BUSH (R), FLORIDA: I'm pleased that she's entered the race, ending a lot of speculation. I'm anxious to hear the views and positions that these candidates will take. I look forward to continue to work on our agenda.

(END VIDEOTAPE)

POTTER: Now Janet Reno says she will run her campaign in a constructive and thoughtful way. And as for all that national attention already over this state gubernatorial campaign, Janet Reno says, no problem, she can deal with it, as she has already before -- Judy.

WOODRUFF: All right, Mark Potter reporting from south Florida. Thanks.

We'll hear more of what Janet Reno had to say later on this hour. But first, a suspected bank robber takes nine people hostage and holds off police for hours. Details on how the standoff ended in our news update.

(COMMERCIAL BREAK)

WOODRUFF: Thank you, Bill. We will discuss the big comings and goings on the campaign trail. Next on INSIDE POLITICS, David Broder and Charlie Cook will consider the implications for election 2002. And later...

(BEGIN VIDEO CLIP)

REP. MIKE CASTLE (D), DELAWARE: I am proud of the label moderate or centrist. I am very proud of the record which we have cast.

(END VIDEO CLIP)

WOODRUFF: The political science of being a Republican centrist as Congress prepares for some tough votes ahead.

(COMMERCIAL BREAK)

WOODRUFF: Janet Reno's decision to run for governor of Florida adds another big name to a race already sure to receive national attention. Earlier, Ms. Reno spoke with CNN's Mark Potter. And now let's hear a little more from that conversation as Reno talks about the issues that she thinks are important and the kind of campaign she hopes to run.

(BEGIN VIDEO CLIP)

JANET RENO, CANDIDATE FOR GOVERNOR OF FLORIDA: I don't take anything for granted, and I will take steps in both the primary and the general to do everything I can to win in a fair, thoughtful way, with respect for the people who have qualified for office, who are very distinguished Floridians.

I think clearly the issues of education and the environment are very high in people's minds. I think everyone is concerned about our elder citizens and how we protect them from abuse and neglect. And I think that the people of the state of Florida would like very much to show the nation how a campaign should be run, how an election should be run, not be an example of how it should not be run.

(END VIDEO CLIP)

WOODRUFF: Joining me now to assess Janet Reno's chances in the political arena, and to cover some of the day's other political developments, Charlie Cook of the "National Journal" and David Broder of the "Washington Post."

David, let me start with you. How does it look for Janet Reno?

DAVID BRODER, "THE WASHINGTON POST": Well, the polls say that she is almost unbeatable in the Democratic primary, but very much of an underdog against Governor Bush. Some of the leaders of the Democratic establishment down there, the two Democratic senators, have been trying to whittle down the Democratic field and implicit in their actions is, I think, a fear that if Reno is their candidate against Bush, that she may be a little too liberal for the Florida voters to support.

WOODRUFF: You mean the two Democratic senators are actively working to keep her out of the race?

BRODER: Not to keep her out of the race, but to reduce the number of opponents so that perhaps a more conservative candidate, former Congressman and Ambassador Peterson or Congressman Davis might have a chance against her. But at this point, every poll that I have seen indicates that she is far ahead in the favorite in the Democratic primary next September.

WOODRUFF: Charlie Cook, is David Broder right? The wisdom now that she may win the Democratic primary, but she's going to have a very tough road when it comes to the general election?

CHARLIE COOK, "THE NATIONAL JOURNAL": I agree with that conventional wisdom. And I would go a step further to say that I think the two senators, if you hooked them up to the polygraph machine, would rather have somebody else be the nominee than Janet Reno.

And I think that a more moderate Democrat would have a better chance. But let me make one argument the other direction: Al Gore got 49 percent of the vote, came within 600 or so votes of winning Florida last fall. I think it's safe to say that a Gore voter is a Reno voter and vice versa.

So I think a moderate -- meanwhile, you had last November the same night, you had Bill Nelson, a moderate Democrat, win the Senate seat by 5 percentage points. So I think a moderate would certainly be a lot stronger, but if Al Gore came so close to winning the state last year, I don't think liberal -- it doesn't mean that a liberal can't win. It would just be a lot easier for a moderate to win.

WOODRUFF: David, is she necessarily seen as a liberal?

BRODER: I think because of her work in the Clinton administration and also her own very pronounced strong views about -- for example, she is an attorney general who believes that prevention of crime by fostering programs for children is probably much more important than being tough on crime as that phrase is normally used in politics.

WOODRUFF: Let's move on to somebody moving out of the political arena, Texas Republican Senator Phil Gramm announcing today he won't run again. Charlie Cook, was this a surprise, and what does it mean for the future in Texas?

COOK: Well, Gramm's office has been vehemently denying rumors that he might retire for a long time. But my hunch always was that there was a good chance he would. He's gone as far in the Senate as he will ever go. He'll never be president. He's a very ambitious guy. He's never made a heck of a lot of money. What was the challenge in remaining in the Senate? I think that he will go out and make some -- make some money.

But -- so it wasn't a huge surprise. It doesn't change -- it doesn't change the chemistry that much, because frankly I think it will be a very difficult state for Democrats to knock off. I think Republicans have a big advantage. Democrats have an outside chance of winning. I think it will be very tough.

WOODRUFF: David, Republicans safe in Texas?

BRODER: It's certainly a Republican state now. And the one possibility that people are talking about today would be former Secretary of Housing and Urban Development, former San Antonio mayor -- and Henry Cisneros should decide to try to come back into elective politics. Cisneros has the kind of personality and in a state with an increasing Latino vote, that might make it an interesting race.

WOODRUFF: To North Carolina now, and Charlie Cook, and the speculation about Elizabeth Dole. What are you hearing that she will or won't run?

COOK: Oh, I think all of the signs are that she's going to run. She's -- and interestingly, apparently Senator Helms called her before he made his announcement and told her to get her running shoes on. Which was, I thought, kind of a bit a surprise. I think absolutely she's running.

I think also, though, former Charlotte mayor Richard Vinroot, who ran for governor last time, is going to run as well. I would give her -- I think that she will be very difficult to beat in the general election. I think Democratic arguments that she's a carpet bagger fall short and I think that she'll be tough to beat. It's not over and she could get rattled in a debate, because she is not the most spontaneous candidate that we have ever saw, but she'll be very tough to beat.

WOODRUFF: David, a shoo-in she is? BRODER: I'm told by Republicans that she really wishes that she did not have to go through the primary. She would like to be a Senator and she is very confident beating anybody that the Democrats put up. But she wishes she did not have to go through a Republican primary, which is probably why Mr. Vinroot is staying in the race, in the hopes that perhaps she will spook out and decide that after running two campaigns is -- one more than she really wants to do.

WOODRUFF: Vinroot being the former Mayor of Charlotte. Finally, gentlemen, let me quickly ask you about California redistricting. We heard today that a Republican Congressman, Steve Horn, announcing he won't run again because of this new Democratic-controlled legislature plan. David, you've just came back from California. How much is it going to change out there after this?

BRODER: Well, if the plan holds, it won't change at all because the Republican leadership in the legislature has acquiesced to a plan that basically limits Republicans to the 20 seats that they have now, gives the one additional seat to the Democrats. But keep your eye on Bill Jones, the secretary of state, Republican candidate for governor. He is thinking seriously about filing a lawsuit, as an individual, to challenge this redistricting plan.

WOODRUFF: All right. We are going to have to leave it there. We have run out of time. Charlie Cook, David Broder, great to see both of you. Thanks again, and we'll see you soon.

To New York City now, where a new poll shows Bronx Borough President Fernando Ferrer has moved into the strong runoff position in the Democratic mayoral primary. The Quinnipiac University survey of likely voters shows Ferrer now leading public advocate Mark Green by two points. And if that holds, the two would be headed for a runoff. City Council Speaker Peter Vallone and Comptroller Alan Hevesi were tied in third place. In a poll just three weeks ago, Ferrer trailed Green by 22 points. Ferrer recently was endorsed by the Reverend Al Sharpton, by former U.S. Senator Daniel Patrick Moynihan and former Congresswoman Geraldine Ferraro. We should tell you that more than half of those polled said they still might change their mind before next Tuesday's vote.

President Bush prepares to host his first state visit. Up next: a preview of the political agenda for Presidents Bush and Fox.

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President Bush tomorrow will formally welcome Mexico's President Vicente Fox to Washington. The two men plan a series of private meetings, along with several public events. For a preview, we rejoin Senior White House Correspondent John King. John.

KING: Judy, a sign of a growing friendship between the U.S. and Mexican governments, Mr. Bush's first international stop was Mexico. Now Mr. Fox, the president of Mexico, will be the first leader toasted at a state dinner here at the Bush White House. But as we have seen in recent days, this friendship, while important symbolically to both leaders, is not enough -- at least, not yet -- to guarantee substantive progress in U.S.-Mexico relations.

Immigration and trade dominated their first round of talks six months ago in Mexico, and will again when the two presidents meet at the White House. Presidents Bush and Fox will stress growing trust and cooperation in U.S.-Mexico relations, but will fall short of a goal of reaching a major new immigration agreement.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This is a complex issue. It's going to take a while to bring all the different interests to the table. But we've made good progress so far.

(END VIDEO CLIP)

KING: There are an estimated three million to 4.5 million undocumented Mexicans living in the United States. Mr. Fox wants blanket amnesty for them. Mr. Bush opposes that, and has faced resistance in Congress as he pushes for some other way to grant legal status to illegal immigrants from Mexico and elsewhere.

(BEGIN VIDEO CLIP)

REP. TOM TANCREDO (R), COLORADO: Guest worker program, we can develop. One that will work, I hope we can develop. But it should not be, and it will not be attached to any sort of amnesty, certainly if I -- or I hope many others of the Congress -- have anything to say about it.

(END VIDEO CLIP)

KING: Mr. Bush wants Congress to grant him broad trade negotiating powers this fall, and will use the Fox visit to hold out the 1994 North American Free Trade Agreement as an example. U.S. exports to Mexico are up nearly 170 percent since NAFTA took effect in 1994, and Mexican exports to the United States grew 240 percent, and now account for 25 percent of the Mexican economy.

(BEGIN VIDEO CLIP)

BUSH: The best way to take pressure off our borders is for Mexico to grow a middle class. And the avenue for Mexico to grow a middle class is trade.

(END VIDEO CLIP)

KING: But organized labor blames NAFTA for lost U.S. manufacturing jobs, and other critics note a U.S. trade surplus with Mexico of $1.7 billion in 1993 is now a trade deficit of $23 billion. And the leaders, while friends, meet at a difficult time: the U.S. economy is sluggish, and Mexico's has fallen into recession. That makes progress on issues like trade and immigration all the more difficult. They are emotional issues in any event, all the more so when times are tough. Judy?

WOODRUFF: All right. John King reporting, once again, from the White House. Meantime, Congress set to the resume the political debate over stem cell research. We'll put the microscope on the role of moderate Republicans in that debate when "INSIDE POLITICS" returns.

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WOODRUFF: A new antiabortion ad is debuting on television stations here in Washington today. A coalition of socially conservative groups banded together to launch the campaign that they are calling "Shake the Nation." The spot features babies playing and then disappearing from a Washington scene. The group behind this spot is hoping to pressure President Bush and the Democratic-led Senate to fill the next open seat on the U.S. Supreme Court with an abortion rights opponent. The campaign is described by some as an effort by conservatives to show a united front after many found themselves on opposite sides of the debate over stem cell research.

Meantime, the U.S. Conference of Catholic Bishops is running new antiabortion ads on radio stations in Philadelphia.

ANNOUNCER: The Supreme Court says that you can choose to have an abortion for any reason at any time, right up through the ninth month. In fact, one out of every four pregnancies now ends in abortion. We simply ask the question: have we gone too far?

WOODRUFF: Now that's a clip from one of three ads scheduled to air in the Philadelphia area -- radio ads for the next two months. As the abortion battle intensifies again on the airwaves, the debate over embryonic stem cell research is about to resume here on Capitol hill. The first of several hearings on the issue will be held tomorrow. And some Republican moderates are expected to push for broader federal funding than President Bush has embraced. CNN's Kate Snow spent some time recently with one G.O.P. centrist who has not been shy about disagreeing with his president.

(BEGIN VIDEOTAPE)

KATE SNOW, CNN CORRESPONDENT (voice-over): This is what the August recess is all about -- back home meeting and greeting. But when Congressman Mike Castle returns to Capitol Hill, it may be no picnic. The former Delaware governor is a Republican who often disagrees with his party and the president. In Washington he wears a label.

CASTLE: I'm proud of the label moderate or centrist. I'm very proud of the record that we have cast.

SNOW: Castle is one of 40 or 50 Republicans in the House who've given some headaches to the Bush White House. With Democrats controlling the Senate and Republicans with a thin margin in the House, those moderates have more power.

CASTLE: I think the White House, the Bush White House -- and they have some very good people there -- but I think they are sometimes surprised that members of the Republican party don't automatically vote the way the president wants them to vote. SNOW: In July, moderates like Castle banded together, delaying the president's faith-based initiative, pushing a broader Patients Bill of Rights than the president wanted, and gathering signatures to force a vote on campaign finance reform.

CASTLE: This is where most of our basic gene discovery work goes on.

SNOW: At a biotech lab in Delaware, Castle is talking about taking on the White House again.

CASTLE: Lets talk about the whole stem-cell business, here, if you will.

PROF. DANIEL CARSON, UNIVERSITY OF DELAWARE: We don't know how long the existing cell lines are going to last.

CASTLE: I worry about where we are going with stem cells. I also worry from the bioethics point of view. I also want to make sure that we are not limiting ourselves.

SNOW: Castle also worries about a push by House Republican leaders for more tax cuts. But he says it's to be expected.

CASTLE: Their responsibility is to come in a little harder and then let us be the softening process.

SNOW: Castle says the party is getting better about consulting with moderates.

CASTLE: Things are going pretty well in Washington.

SNOW: And the moderates are feeling their clout.

Kate Snow, CNN, Wilmington, Delaware.

(END VIDEOTAPE)

WOODRUFF: And INSIDE POLITICS will be right back.

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WOODRUFF: That's it for this edition of "INSIDE POLITICS." But of course you can go on-line all the time at CNN's allpolitics.com. The AOL key word: CNN. Our e-mail address is: insidepolitics@cnn.com. I'm Judy Woodruff.

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